Earnings Season: Low Expectations, High Hopes

Warned about weak second-quarter earnings, investors pin hopes on gains later this year and beyond. Still too optimistic?

School's out and the report cards are in. More than a few parents were warned that their kids' performances were falling short of expectations, so a grade of B is greeted like an A when mom and dad were braced for a C (or worse).

So it will be for the second-quarter earnings season, which begins in earnest Monday when Alcoa (ticker: AA) will announce results. Based on warnings from companies, shareholders are braced for some dismal...